Transcript of "It Legal Services"

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Legal Services Reform Update
September 2008
The Government is reforming the regulatory framework for legal services in England and Wales in
order to put the consumer first. We want a framework that promotes competition, innovation and
protects the consumer. To this effect, the Legal Services Act was given Royal Assent on the
30 October 2007. In this Fact Sheet you will find information on the following areas:
The Legal Services Act 2007 1
Transforming Legal Services 1
Background to the Reform 2
Implementation Progress 2
Timetable for Reform 3
Delivery of Provisions in the Act 3
Consultation and Engagement with Stakeholders 4
Further Information 4
The Legal Services Act 2007
The Legal Services Act, which received Royal Assent on 30th October 2007, reforms the way in
which legal services are regulated in England & Wales. The Act establishes an oversight regulator,
the Legal Services Board (LSB) and an independent complaints handling body, the Office for
Legal Complaints (OLC). It will also allow for Alternative Business Structures (ABS), which will
enable firms to explore new ways of organising their businesses to be more cost-effective,
including permitting different kinds of lawyers and non-lawyers to work together, and to allow for
external investment.
Transforming Legal Services
The new system will:
1) Establish a more effective regulatory framework
The current regulatory framework is complex and fragmented, with regulatory anomalies and gaps,
which make it confusing for consumers. The new system will put an end to this confusion and will
establish a clear, flexible and transparent system, which is responsive to consumer needs, with a
single set of regulatory objectives.
2) Ensure proportionate supervision of approved regulators, including licensing authorities
Current regulators of reserved legal activities will become approved regulators under the
supervision of the LSB. In addition, any organisation wishing to regulate reserved legal activities in
the future will have to be designated as an approved regulator by order of the Lord Chancellor,
upon the recommendation of the LSB. Approved regulators seeking to be licensing authorities -
i.e. regulators of Alternative Business Structures - will also have to be designated by an order of
the Lord Chancellor made upon the recommendation of the LSB, and will be subject to the LSB's
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Legal Services Reform Update
Regulators will have clear objectives to guide them in exercising their functions. The objectives
include:
• supporting the rule of law;
• improving access to justice;
• protecting and promoting the interests of consumers and the public interest;
• promoting competition;
• encouraging a strong, diverse and effective legal profession; and
• increasing public understanding of their legal rights and maintaining the professional principles
of those providing legal services.
The LSB will have a number of powers and sanctions available to it to ensure approved regulators
are fulfilling these objectives.
3) Establish a new approach to complaints handling
The LSB will appoint a new and independent OLC, which will administer an ombudsman scheme
that will deal with all consumer complaints about legal services. The OLC will be a single body,
completely independent from approved regulators (ARs). Legal service providers would be
required to maintain ‘in-house’ complaints handling procedures, which will have to satisfy any
requirements set by the LSB, to deal with complaints made by consumers in the first instance.
The OLC will then handle all complaints made against providers that cannot be resolved at the
local level. This will remove the current uncertainty amongst consumers as to where, or to whom,
they should address their complaint. The LSB has several powers in relation to the OLC. It has the
power to set the OLC's budget and, where appropriate, set the OLC targets.
4) Deliver new ways of meeting consumer needs
Consumers have a right to expect services to be delivered in a way that suits them, not providers.
The Act will provide opportunities for more efficient and consumer friendly ways of delivering legal
services, through Alternative Business Structures (ABS). Different types of lawyers, and non-
lawyers will be able to work together in innovative practices, including 'one-stop shops', which can
deliver packages of legal and other services in more consumer focussed and convenient ways.
The LSB will supervise all licensing authorities (i.e. those bodies that regulate ABS) and will make
rules governing how it carries out this supervision. It will also have powers to decide which bodies
may become licensing authorities and it can in certain circumstances become one itself.
Background to the Reform
The proposals initially set out in the Legal Services Act have been subject to rigorous scrutiny.
This included Sir David Clementi’s 2003-04 independent ‘Review of the Regulatory Framework for
Legal Services in England and Wales’, and the Government’s 2005 White Paper which built upon
Sir David’s recommendations. The draft Legal Services Bill was also subject to pre-legislative
scrutiny by a Parliamentary Joint Committee in summer 2006. The full Bill was introduced to
Parliament in November 2006 and Royal Assent was received on 30 October 2007.
Implementation Progress
Implementation of the LSB and the OLC is expected to take close to three years from Royal
Assent. This will see the LSB fully established by early 2010 and the OLC fully established by late
2010. However, the LSB Chair and ordinary members and the OLC Chair and other ordinary
members are being appointed earlier than this to ensure that they have the opportunity to input into
the implementation process and set the strategic direction of their respective organisations.
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On the 1 May 2008, David Edmonds took up his post as the inaugural Chair of the Legal Services
Board. The term of appointment is until May 2011. The first nine members of the Legal Services
Board took up post on the 1 September 2008 for a three-year period. They are:
• Terence Connor; Stephen Green; William Moyes; Barbara Saunders and Nicole Smith as the
lay members; and
• Rosemary Martin; Michael Napier; Andrew Whittaker; and David Wolfe as the non-lay
members.
The appointment of the OLC Chair will take longer because the LSB appoints the OLC.
The expectation is that the OLC Chair will be appointed by October 2008. This timetable will still
ensure that the OLC Chair is involved in setting the strategic direction of the OLC as early as
possible.
Once the new Boards have been established responsibility for managing the implementation
process will be handed over to them. This supports the fact that both organisations are being set
up to be independent from the professions and Government. A written ministerial statement was
made on 18th of June announcing the timetable for closure of the Office of Legal Services
Ombudsman (OLSO) and the Office of the Legal Services Complaints Commissioner (OLSCC). It
has been decided that the OLSCC will close in March 2010 and the OLSO will not close before
December 2010.
Timetable for Reform
Key Milestones
October 2007 Legal Services Act gains Royal Assent
May 2008 LSB Chair appointed
September 2008 LSB ordinary members appointed
October 2008 LSB Chief Executive selected / identified
October 2008 OLC Chair appointed
December 2008 LSB fully constituted – Chief Executive in post
February 2009 OLC ordinary members appointed
May 2009 OLC Chief Ombudsman appointed
Early 2010 LSB becomes fully operational
Late 2010 OLC becomes fully operational
It is important to remember that these milestones may need to be adjusted as new information
comes to light and circumstances change.
Delivery of Provisions in the Act
Going forward, the Ministry of Justice needs to make a number of Commencement Orders, and
other Statutory Instruments, to give effect to the legislation. Many of the reforms delivered by the
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Act require the LSB and OLC to deliver them. However, there are some provisions, which can be
commenced in advance of the establishment of the two new bodies. A full commencement plan for
the Act is now in place, and you can view the orders that are in force on the department’s website
at www.justice.gov.uk/whatwedo/legalservicesreform.htm.
Consultation and Engagement with Stakeholders
The Act came about as a result of extensive consultation with a range of stakeholders including
consumer bodies, the legal profession, informed individuals, other regulatory bodies, academics
and complaints handling bodies. It was also subject to pre-legislative scrutiny and extensive debate
in Parliament.
The Legal Services Reform Programme continues to work closely with stakeholders to keep them
updated on progress in relation to implementation and to ensure that the Programme benefits from
their experience and insight.
Further Information
To keep up to date with the latest on the reforms, please visit the Ministry of Justice website
at www.justice.gov.uk/whatwedo/legalservicesreform.htm.
Alternatively, should you have any questions, you can email us at
legalservicesreformprogramme@justice.gsi.gov.uk.
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